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GET YOUR MONEY BACK! Misconduct and malpractice. Investment industry "best and worst practices". Information to improve public protection. Expert witness services for industry and investors. Forensic investment analysis. • View topic - Do the RCMP get their man if he is white collar? Nope.

Do the RCMP get their man if he is white collar? Nope.

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Re: White Collar Criminal Activity Widespread

Postby admin » Wed Jan 28, 2009 12:05 pm

rough draft on dollar damages to white collar crime
With thanks to Ken Kivenko for starting this ball rolling
www.canadianfundwatch.com

And Diane Urquhart for providing many of the numbers

CATEGORIES OF FINANCIAL ASSAULT IN CANADA


Systemic categories (in which "the system is broken", or designed to serve selfish interests)

1.  CORPORATE- Accounting fraud, self dealing, executive kleptocracy, insider trading,
regulatory capture, toxic products approved, see no evil

2. CONFLICTED DEALERS/ADVISORS - misleading, misrepresentation, unsuitable investments, double dipping, self dealing, fraud, theft, overcharging, predatory practices, salesmen posing as trusted professionals

3. TOXIC PRODUCTS- highest fees possible, penalties, hidden compensation, hidden conflicts, caps, garbage packaged as quality


 
The above categories are all considered systemic.  Built into the system by poor design.  Intentional or otherwise, they serve to transfer more than $50 billion dollars each and every year from the hands of trusting Canadian consumers, into the hands of self serving financial interests. This is by far the largest crime against Canadians of all white collar crimes.
 
Non-systemic
Non systemic categories of financial assault include brokers who out-and-out steal from clients, without even the pretense of "serving" the public. These are simple small time crooks, with the ability to steal millions or in a few cases, tens of millions, but they pale in comparison to the systemic thefts of billions in the first category.
 
1.  Brokers who steal clients assets.
Estimated at ?? millions each year.

Hidden from public view
 
The third category of financial assault in Canada is an estimate of the dollar damages that are hidden by settlements with confidentiality agreements.  Those damages where clients actually "catch" a financial firm assaulting them, suffer through five to ten years of denials and dispute by the firm, and then settle for pennies on the dollar, giving up their rights and their voice in exchange for a return of their own money.
 
$$ Unknown damages, but also strongly indicative of a system that is allowed to play by it's own rules.

 
Un-compensated or un-punished
 
Last, but not least, is the amount of the above that goes without compensation, without accountability, without recourse.  It is the reward for committing financial crime in Canada, and it is becoming very well known worldwide. This is considered due to the ineffectiveness of Canadian financial regulators to do the job that they public wishes they would do.
 
The amount of financial crime in canada that does not have a recourse, a punishment, or where the perpetrator gets to keep the ill gotten gains is estimated at $$? (estimates put uncompensated damages at greater than 99% of all the damages described above)
 

Below is partial breakdown
------------------------------------------------------------

Corporate



Self-dealing –Hollinger /Conrad Black
Outright fraud –Bre-X
Defective disclosure/acct’g -Nortel
Front for Russian mafia- YBM Magnex
Misappropriation of fund assets-Crocus LSIF
Theft of fund assets -Norbourg
Mutual fund market timing -20 fund cos.
Theft of assets-Portus Alternative Mngt. Hedge fund
Fraudulent asset valuation –Strategic Value Corp.


Stock options on “faked” earnings

John Roth removes $120 mil from Nortel (US criminal investigation underway) (nothing in Canada)

CIBC on Global crossing
Global crossing bankrupt within one year of CIBC offering ??
CIBC execs get stock options of ?? Millions on deal
CIBC pays 2.4 bil in suit on enron deal
John Hunkin walks away from CIBC with $54 mil personally

Nortel bankruptcy after execs cook books and pay themselves on phoney bonus schemes $366 billion in market value lost as Nortel goes from the most valuable company in Canada to worthless.

$25 bil per year from mutual fund highest fees in world Keith Ambaschteer U of T

$10 bil “cost of fractured regulatory regime”, John Coffee, Columbia University
--------------------------------------------------------

CONFLICTED DEALERS/ADVISORS

Opaque disclosure / “educational” seminars
Excessive fees/undue leveraging
Deceptive marketing practices/financial porn
Incorrect Information
Misleading articulation of risks
Embedded commissions

Painting the tape. In what also is called "banging the close," portfolio managers run up the price of what they already own. $??

Double dipping (Commissions and IPO fees on top of commissions) $??

Abuse of fee based accounts 1 to 2% on every victim $??

Mutual Fund Market Timing $1,260 mil

Mutual fund Window dressing.....mutual fund practice of moving their funds into the top performing stocks at reporting time, so that their financial statements appear as if they were smart stock pickers.......when they made the moves “after the fact”. $??

FMF capital bankrupt within six months of BMO selling it $??

2% of all mutual funds sold in 2007 were into WRAP programs (large proportion of those being less suitable but more profitable house brand funds) est $1 bil per year
(source IFIC)

mutual funds sold at highest commission choice, contrary to duty of care owed to clients (source IFIC)
$1 bil per year on sales of $20 bil

Unauthorized Foreign Exchange Transactions in RRSP & RRIFs$2.5 bil

Canada exhibits illegal insider trading before 63% of its acquisition
announcements,
Insider Trading Surrounding Acquisitions $14.4 bil


---------------------------------------------------------

TOXIC PRODUCTS

Mutual funds- excessive fees ( Canada has highest in the world)
Income Trusts –misrepresentation
PPN’s -excessive fees, opaque disclosure
LSIF’s- just don’t make money
Structured products – complex/expensive
Commercial Paper- non-bank ABCP

The non-bank ABCP market collapsed in August, 2007, leaving investors holding about $35-billion of frozen notes, including 2,542 individuals with investments totalling $317-million.


$8 billion of investor losses on 46 income trust IPO's and secondary
offerings down more than 30%, where investment bank marketing
materials gave deceptive yields and assurances of low risk to seniors
seeking income and preservation of capital. Not the subject of any SRO or
provincial securities commission regulatory restrictions or investigations.
For details see:
http://www.sipa.ca/



The non-bank ABCP market collapsed in August, 2007, leaving investors holding about $35-billion of frozen notes, including 2,542 individuals with investments totalling $317-million.


$8 billion of investor losses on 46 income trust IPO's and secondary
offerings down more than 30%, where investment bank marketing
materials gave deceptive yields and assurances of low risk to seniors
seeking income and preservation of capital. Not the subject of any SRO or
provincial securities commission regulatory restrictions or investigations.
For details see:
http://www.sipa.ca/

HEATING OIL PARTNERS $165mil
FMF CAPITAL $196 mil
SPECIALTY FOODS $250mil
ASSOCIATED BRANDS $118mil
SPINRITE SUSPENDED $176mil
BOYD GROUP $67mil
MADACY ENTERTAINMENT $60mil
BLACKWATCH ENERGY SERVICES $132mil
ART IN MOTION $59mil
SOMERSET ENTERTAINMENT $106mil
ADVANCED FIBER TECH $97mil
HIGH ARCTIC ENERGY SERV $68mil
VILLAGE FARMS $49mil
GRANBY INDUSTRIES $48mil
ENTERTAINMENT ONE $185mil
GIENOW WINDOWS & DOORS $150mil
CANWEL BUILDING $118mil
CLEARWATER SEAFOOD $150mil
SFK PULP $299mil
PANTERA DRILLING $30mil
HARDWOODS DISTRIBUTORS $68mil
CLEAN POWER $167mil
MENU FOODS 86mil
DEEPWELL ENERGY SERVICES $20mil
E.D. SMITH $103mil
CRESTSTREET POWER $42mil
ARRISCRAFT INTERNATIONAL $28mil
IMPAX ENERGY SERVICES $29mil
OSPREY MEDIA $196mil
NEWPORT PARTNERS $142mil
STEPHENSON'S RENTALS $26mil
TREE ISLAND WIRE $69mil
CANEXUS $97mil
PETROWEST ENERGY SERVICES $80mil
PEAK ENERGY SERVICES$216 mil
TERRAVEST $80mil
SUPERIOR PLUS $1,123mil
ENERGY SAVINGS$1,170mil
AVENIR DIVERSIFIED $246mil
WELLCO ENERGY SERVICE $83mil
CHEMTRADE LOGISTICS $218mil
MULLEN GROUP $755mil
BUILDERS ENERGY $116mil
CONNORS BROTHERS $332mil
MEDISYS HEALTH GROUP $26mil
ATLAS COLD STORAGE $265mil
TOTAL SECONDARY OFFERINGS $4,632mil
INCOME TRUSTS CAPITAL LOSSES $1,385 6 $8,309

LIST OF CANADIAN INVESTOR LOSSES CAUSED BY MALFEASANCE AND LACK OF MARKET COMPETITION

HERCULES MANAGEMENT $40mil
VICTORIA MORTGAGE $50mil
CANADIAN COMMERCIAL BANK $1 bil
NORTHLAND BANK $230mil
PRINCIPAL GROUP $500mil
STANDARD TRUST $50mil
TEACHERS INVESTMENT AND HOUSING CO-OPERATIVE $150mil
CASTOR HOLDINGS $2bil
BRAMALEA $1bil
CARTAWAY $450mil
GOLDEN RULE RESOURCES $350mil
BRE-X $ 6 bil
CONFEDERATION LIFE $10bil
SHAMRAY GROUP $7mil
LIVENT $500mil
YBM MAGNEX$650 mil
JEVCO INSURANCE$30mil
COREL $500mil

PHILLIPS SERVICES $2.6 bil
MERIT ENERGY $100mil
KING'S HEALTH CENTER$100mil
CINAR $1.4 bil
VISUAL LABS$300mil
HOLLINGER $500mil

CROCUS $150mil
PORTUS $120mil
NORTHSHIELD $500mil
NORBOURG $80mil

To be expanded
To be continued.......

www.investoradvocates.ca
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Re: Do the RCMP get their man if he is white collar?

Postby admin » Mon Dec 22, 2008 11:29 am

From Canadian Business Online, September 24, 2007
Editor's Note: A national scandal
When will Canada's justice system take financial crimes seriously?

By Joe Chidley
This magazine has long argued that establishing a national securities regulator is a vital step not only toward cutting inefficiencies out of the patchwork provincial system Canada now has, but also toward protecting investors from fraud and other financial crimes. Lately, Canadians have been getting political leadership on the issue. Finance Minister Jim Flaherty seems never to miss an opportunity these days to point out why Canada needs one regulator to protect investors. Good for him. But here’s the thing: a national securities regulator will not be enough. Read what Bill Majcher and Craig Hannaford have to say in this issue (page 24), and you’ll see what I mean. For years, the two were top cops on the front lines of the RCMP’s white-collar crime squads, and they paint an alarming picture of what’s really going on. They say police are demoralized, ill-equipped and handcuffed by procedure in financial crime investigations. The rich play the sclerotic Canadian courts, and prosecutors often don’t have the expertise to win cases. Meanwhile, Majcher and Hannaford say, foreign police have greater investigative powers over Canadians than domestic police do. Small wonder Canada has an international reputation as a haven for white-collar criminals. It’s earned it. As a step toward fixing this scandalous state of affairs, a national securities regulator might be necessary, but it is not sufficient. Canada needs a full-scale review of the judiciary’s interpretation of privacy, disclosure and search-and-seizure rules; of the training of prosecutors; of the resources allotted to police; of sentencing and parole guidelines; and of the culture of complacency and appeasement that seems to have infected the justice system in its pursuit of financial criminals. Theirs are not victimless offences. Investors, workers, businesses and government all pay. And as Majcher and Hannaford make clear, Canada’s tolerance of white-collar crime has claimed another victim: the country’s reputation.
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Re: Do the RCMP get their man if he is white collar?

Postby admin » Mon Dec 22, 2008 11:27 am

Mounties' stock-market fraud squads a disaster

David Baines
December 20, 2008 1:06 AM

Today I am providing a list of charges laid by the RCMP Integrated Market Enforcement Teams in Vancouver and Calgary since they were inaugurated in 2003 and 2004, respectively, as part of a national program to fight stock market fraud. It could be the shortest column I have ever written.

HERE'S THE LIST:

Vancouver: Two people charged (one convicted, the other on the lam).

Calgary: No charges.
While those statistics are depressing enough, they still don't adequately quantify what a disaster this program has been.

You should know that the annual budget for the Vancouver team alone is $2.5 million, and that 23 people are working in the team's office in downtown Vancouver. Here's a list of staff members:

Eight RCMP members; one RCMP member on parental leave; three civilian investigative assistants; one civilian employee on sick leave; three public-service support staff; a department of justice lawyer; a full-time employee on loan from the Investment Industry Regulatory Organization of Canada; a civilian criminal intelligence analyst; a forensic accountant; a full-time officer on loan from the Vancouver police department; and two major case-management information processors, who are currently being hired.

The two cases that have resulted in charges are:

In May 2006, Vancouver resident Kevin Steele was charged in a commodities trading scam. This case did not represent any sort of investigative or prosecutorial challenge. It was originally investigated by the U.S. Commodity Futures Trading Commission, and Steele made it clear from the outset that he would cooperate with the RCMP investigation. He pleaded guilty and was sentenced to six years in prison.

In June this year, the Vancouver team charged former Victoria investment executive Ian Thow in connection with multiple securities fraud. There was nothing about this case that was subtle. Thow took money from his clients, promised to invest it in sundry unauthorized investment schemes and absconded with the money. But it took three years to lay charges. Alas, well before the charges were laid, Thow slipped across the border to Seattle. To date, RCMP have not been able to apprehend him.
And that's it for the Vancouver team, which is celebrating (if that's the correct word) its fifth anniversary this month.

In Calgary, where no charges have been laid, the annual budget is about $2 million, depending on the staff complement. Right now, there just over 20 people working there, and more on the way.

Targeting securities crime

When the program was established in 2003, the plan was to combine the resources of the RCMP, city police, provincial securities regulators, federal prosecutors and private forensic accountants for a coordinated assault on securities crime. The goal was to lay charges within a year of the offence.

Teams were established in Toronto, Montreal, Calgary and Vancouver. This year, the overall national budget will be $31 million.

After the Vancouver team had been in operation for a full year and no charges had been laid, I published my first report card: "It's much too early to read anything into this," I wrote at the time. "But with a second team to be added in March [2005] or shortly thereafter, this is the year that the unfettered optimism I observed at the official opening must translate into criminal charges."

By December 2005, the second anniversary, there were still no charges: "Obviously we haven't met the expectations of the public," Insp. George Pemberton, who heads the team, said at the time.

"I think that, in retrospect, the expectations that were set -- the promise that cases would go from inception to referral within one year -- were overly optimistic. That's a really aggressive timeline. ... I think it's fair to hold our feet to the fire."

By December 2006, the third anniversary, only one charge had been laid (against Kevin Steele). "I am the first one to admit that things are not going as quickly as I would like," Supt. John Sliter, the program's national director, conceded at the time. "I think it's fair to hold our feet to the fire," he added, taking a page from Pemberton's song sheet.

By December 2007, the fourth anniversary, nobody else had been charged. "We're starting to get things together," Pemberton said, noting that the team had submitted two briefs to Crown for charge approval and was investigating alleged assay altering by former Southwestern Resources CEO John Paterson.

Since then, Thow has been charged, but not arrested. The police and Crown approach to his apprehension strikes me as very strange. Although Thow is a fugitive from Canadian justice, he is not on the RCMP's "most wanted" list, and no attempts have been made to enlist help in Seattle to apprehend him. Instead, there has been much fiddling, with no result.

Meanwhile, the Vancouver team has submitted a charge approval brief to Crown counsel on the Southwestern file, but no charges have been laid yet. I must admit there is no urgency in this matter. Paterson, unlike Thow, is cooperating with police and doesn't represent a continuing threat to the public.

Hotbed of crime

In assessing the Vancouver team's performance, it is important to understand that getting stock market miscreants criminally charged is the primary purpose of the program. Anybody who follows my column will know that B.C., in particular, is a hotbed of stock market crime. Almost every week, I report on new instances of securities fraud. Although they add up to hundreds of millions of dollars of losses and untold human suffering, the perpetrators rarely have to account for themselves in court.

In the absence of charges, the IMET teams like to talk about tangential work they do. For example, Pemberton says one of his team's "real successes" was working with the B.C. Securities Commission and the U.S. Securities and Exchange Commission to short-circuit U.S. over-the-counter promotions that are being run from Vancouver. (They have been dropping into company offices, reminding promoters of their reporting obligations under B.C. and U.S. securities rules.)

Similarly, Insp. Eric Mattson, head of the Calgary IMET, says his team has provided investigative assistance to other police units, such as the commercial crime and organized crime units. But when I asked him to name any cases they assisted in that resulted in charges, he replied, "I'm not going to comment on that."

Why he wouldn't comment is puzzling. It's been my observation that, whenever criminal charges are laid, police and regulatory agencies are not at all shy about claiming credit. My conclusion is there isn't much to comment on.

Disappointing performance

The public figure who has the biggest stake in the effective criminal prosecution of stock market crime is Doug Hyndman, chairman of the B.C. Securities Commission. He can only do so much to police the market. Any real punishment and deterrence has to be meted out by police, prosecutors and judges.

In an address to the Economic Club of Toronto in September 2007, Hyndman said the IMET's performance had been "disappointing."

"Despite spending about $100 million on this program so far, the federal government has achieved almost nothing," he said.

Since then, the Montreal team (which hadn't laid any charges at that point) announced charges in the case of Norbourg Asset Management, and the Toronto team (which had previously laid charges in just three cases) announced additional charges relating to Nortel, Royal Group Technologies, and Sulja Brothers (a pink-sheet company).

But we have had only one additional charge in B.C., which doesn't appear to impress Hyndman. When I asked for a comment on the Vancouver IMET's performance to date, he declined to provide one, and instead referred me to his previous speech.

He was disappointed then. Obviously, he still is.

dbaines@vancouversun.com
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Postby admin » Sun Aug 10, 2008 5:33 pm

OSC and RCMP IMET News Releases August 6, 2008
Please see the attached news releases from the Ontario Securities Commission and the RCMP Integrated Market Enforcement Team released on August 6, 2008, which announce the following:

TORONTO  The Ontario Securities Commission (OSC) today announced the appointment of Michael Watson, Q.C. as Special Advisor Capital Markets Enforcement to the RCMP Integrated Market Enforcement Program.



From all of the attached media articles of the past two years and my own direct experience, my conclusion on this new appointment by the OSC of a Special Advisor to the RCMP IMET, is that the Federal Government and Ontario Government are not serious about fixing Canada's securities crime policing problem The four Ministers involved in this decision surely know that the OSC and Michael Watson, as its Head of Enforcement, have an abysmal record of failing to obtain quasi-criminal prosecutions in the Ontario Court of Justice. Plus, the media articles show a litany of broad-based complaints about the OSC failing in its own general mandate to provide investor protection through enforcement of security law violations. How could the OSC possibly assist the RCMP IMET in improving its own abysmal record on securities crime prosecutions, which the Canadian Business highlights in the attached "Calling All Fraudsters" Editorial and the Toronto Star exposes in its series "Ontario Third World Enforcement"? The four Ministers impacted by this appointment are Federal Minister of Public Safety Stockwell Day, Federal Minister of Finance James Flaherty, Ontario Minister of Community Safety and Correctional Services Monte Kwinter, and Ontario Minister of Finance Dwight Duncan.



Gary Logan is a recently retired Detective Sergeant from the Toronto Police Services Fraud Squad, who developed the proposed securities crime complaints intake and assessment system administered by police forces across Canada, including the Federal RCMP Integrated Market Enforcement Team. This proposed securities crime complaints intake and assessment system is described in the attached "Logan Submission to Expert Panel - Securities Crime Complaints Intake and Review Panel July 11, 2008.pdf." I wrote the attached Opinion Editorial about Mr. Logan's proposed securities crime complaints system in the Ottawa Hill Times, "Fixing Canada's Third World Securities Crime Enforcement," dated January 7, 2008. The system Mr. Logan is proposing is the same system he developed and is working successfully for Mortgage Fraud in Ontario. See also the support for this new securities crime complaints intake and assessment system in the submission of the National Pensioners and Senior Citizens Federation Submission to the Expert Panel on Securities Regulation dated July 10, 2008.




If the Ministers named above want to combat securities crime and are sincere in their efforts to protect the general public from securities crimes, then today's news release and appointment is a backward step. These Ministers need to start listening to the informed views of the public being expressed by the media and new experts such as Gary Logan, who has had success in securities crime prosecutions, such as in the case of the two investment industry fraudsters, Nelson Allan and Michael Holoday. These securities fraudsters were put into jail by the Toronto Police Services Fraud Squad. John Reynolds wrote a book called "Free Rider" on the Michael Holoday case, which covers the work of Gary Logan and his fellow senior fraud squad detective, Jeff Thomson.



The Federal Government and Ontario Government have to stop relying on their traditional securities industry advisors on how to fix Canada's broken securities crime system.



For example, one of their advisors is Purdy Crawford, who was the CEO at Imasco-Imperial Tobacco when the largest tax avoidance fraud in Canadian history occurred. David Wilson, Chairman of the OSC, has himself in his former job of CEO of Scotia Capital Markets. supervised billions of dollars of income trusts and Non-Bank ABCP being placed into the retail marketplace, where there is now widespread allegations of securities fraud, even alleged within the Ontario Superior Court of Justice proceedings on ABCP restructuring.



Diane A.Urquhart, B.A. & M.A. Economics, CFA

Independent Analyst
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Postby admin » Sun Jul 06, 2008 11:31 am

IMET should be ashamed and the MFDA should news release the fact that
victims were the real driving force.Not to do so would be like crediting
Canaccord for resolving the ABCP scandal rather than victim Brian Hunter [CB magazine did recognize his heroic work on behalf of all retail "investors" infected with the ABCP virus!Another question: How come the MFDA didn't refer the case to the RCMP/IMET in BC?


This June 26, 2008 RCMP News Release
http://bc.rcmp.ca/ViewPage.action?conte ... nguageId=1
is unfair to victims. The statement “IMET began investigating Mr. THOW in
the summer of 2005 based on a complaint received from Berkshire Investment
Group (Berkshire). ” Here’s why : Abused clients raised red flags with
Berkshire, the RCMP and the MFDA months before Berkshire even accepted
there was a problem with their Victoria branch manager. Between November
1998 and June 2005, Thow was registered in British Columbia as a mutual fund
salesperson, branch manager and officer with Berkshire. Berkshire itself was
sanctioned by the MFDA on Dec. 13, 2007 .The Hearing Panel approved a
Settlement Agreement entered into between the MFDA and Berkshire. Under the
terms of the settlement, the Hearing Panel imposed a fine in the amount of
$500,000 on Berkshire and required Berkshire to pay $50,000 in respect of
the MFDA’s costs of its investigation and the hearing. The Settlement
Agreement concerned Berkshire’s failure to conduct reasonable supervisory
investigations between September 16, 2004 and June 1, 2005 in response to
reports it had received from two individuals concerning the activities of
one of its mutual fund salespersons. Berkshire further acknowledged that,
had it taken those measures, it is more likely that Thow’s activities would
have been discovered and brought to an end. Instead, Thow was able to
continue to persuade individuals to provide him with an additional $6.3
million, almost $4.5 million of which was received from clients of
Berkshire. Ref http://www.mfda.ca/news/releases07/Rele ... kshire.pdf

NOTE THE TIMELINES! We add parenthetically that the name Berkshire is no
more; The new owner, Manulife, has given the firm a well needed name change
and likely a lot more.

ken k
Kenmar Associates
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Postby admin » Fri Mar 21, 2008 12:17 am

Council handed task to fix RCMP
OMAR EL AKKAD

From Friday's Globe and Mail

March 20, 2008 at 9:56 PM EDT

OTTAWA — Public Safety Minister Stockwell Day announced yesterday the creation of an RCMP "reform implementation council," charged with helping turn the troubled federal police force around.

The new council is a direct response to a key task-force report completed late last year that found many accountability and management problems within the federal police service.

The more than 40 recommendations made by the task force include making the RCMP a separate entity from the government. The new council will oversee the implementation of those recommendations. The council is expected to submit its first progress report to the minister by Sept. 30, with a follow-up report due next March.

Mr. Day said the creation of the council will allow the government "to really start to get to the business of rolling up of the sleeves and making sure that everybody's working together to see the types of changes, the cultural and governance changes, that will carry the RCMP forward."


Enlarge Image
Public Safety Minister Stockwell Day discussed a plan for changes to turn the RCMP around after recent problems. (Troy Fleece/The Canadian Press)

Videos

RCMP overhaul

Public Safety Minister Stockwell Day announces the creation of an RCMP 'reform implementation council'

Internet Links
On the Web: RCMP responds
Critics, however, said the move fails to effect real change within the RCMP.

"We now have a committee to look at the recommendations of another committee," said Liberal national security critic Ujjal Dosanjh.

Mr. Dosanjh added that it's still not clear whether the government intends to act on what is perhaps the most significant recommendation made by the task force last year: the creation of a civilian board of management to oversee the police force.

Asked whether the government has approved that particular recommendation, Mr. Day's senior assistant, John Brent, said by e-mail: "Some of the Task Force recommendations involve complex structural changes. The Government will take the time necessary to give them proper consideration before taking further action."

Yesterday, RCMP Commissioner William Elliott welcomed the creation of the council.

"I have made it abundantly clear that the status quo is not an option," Commissioner Elliott said in a press release, "and I believe our people are ready for real and substantial change."

The new council's members bring with them a mix of police and corporate experience.

David McAusland, chairman of the council, has an extensive background in corporate governance. He most recently served as vice-president of corporate development and chief legal officer at Alcan Inc.

"My experience is that regardless of the type of organization you're dealing with … excellence in management and excellence in leadership is driven by organizational excellence," he said.

The rest of the five-person council includes:

- Jean-Claude Bouchard, a career public servant who served in various government positions.

- Jocelyne Côté-O'Hara, president of a Toronto-based consulting firm.

- Beverley Busson, who served as RCMP commissioner from December, 2006, to July, 2007.

- Kevin McAlpine, a professor with the school of justice at Ontario's Durham College. He served as chief of police with Durham Regional Police Service from 1997 to 2005, and before that held the same job with the Peterborough Community Police Service.
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Postby admin » Sat Feb 16, 2008 5:03 pm

Subject: RCMP Investigation of Income Trusts' Illegal Insider Trading
Was the RCMP investigation of income trusts' illegal insider trading during the last federal election campaign a teapot tempest, as James Travers says it was in today's [attached pdf & html below] Toronto Star?

"Canadians still don't have a clue what happened in the heat of the last campaign. They don't know why the RCMP, playing fast and loose with procedures, detoured so far out of its way to make sure voters knew Liberal finance minister Ralph Goodale was being investigated for rumoured leaks of his income trust decision.

As it turns out, the probe was a teapot tempest. A single finance department official was charged with breach of trust after an exhaustive 14-month investigation."

Or is there more at play?

"Canadian Business senior writer John Gray talked with Craig Hannaford and Bill Majcher—two IMET officers who recently left the force—about the problems cops face in getting their man, and what can be done about them."

"Their message: When it comes to white-collar crime, it’s worse than you think."

Bill Majcher: "The system is pretty much non-existent. You can fix something that is hemorrhaging, but if the body is already lifeless, you have to start fresh. We need politicians to admit that the system is broken from the top to the bottom. Canadians have to understand that we have a two-tiered justice system, where people with money can play the system. Show me a person who has gotten any sort of satisfaction from going to the authorities after being victimized by a white-collar fraud…who got their money back in a timely fashion and didn’t go through a lot of grief. I can’t think of a single person like that."



Read Larry Elford's Januray 2, 2006, complaint to the Investment Dealers Association below about the income trusts' illegal insider trading investigation:



Larry Elford

521 Fairmont Blvd South,

Lethbridge, Alberta, T1K 7G3

Tel: (403)

Fax (403)

E-mail:



January 2, 2006



Joseph J. Oliver
President & Chief Executive Officer

joliver@ida.ca



-and-



Paul Bourke

Senior Vice President, Member Regulation

pbourke@ida.ca


Investment Dealers Association of Canada

Suite 1600, 121 King Street West,
Toronto , Ontario M5H 3T9
Tel:(416) 364-6133

Fax: ( 416) 364-0753
Enforcement Matters Only: Fax (416) 364-2998

enforcement@ida.ca



Dear Joe Oliver and Paul Bourke:



On December 28, 2005, it was publicly announced that an RCMP investigation has begun on the alleged illegal insider trading of income trusts and dividend paying common shares on November 23rd prior to Finance Minister Ralph Goodale’s announcement of no new business tax on income trusts and a reduction in the personal taxes on dividends. RCMP spokeswoman, Nathalie Deschênes, confirmed that the investigation will involve an RCMP Integrated Market Enforcement Team, a specialized unit that includes RCMP officers and securities regulators.

I am writing today as an individual investor and a retired twenty year investment industry veteran to complain about the unusual increases in trading volume and up ticking of prices in income trusts and dividend paying common shares that occurred on the afternoon of November 23rd, where the trades were executed primarily by a subset of Investment Dealer Association (IDA) member investment banks. Also, Eric Beauchesne of CanWest News Service reported in his December 10, 2005 article “Renewed Call for Income Trust Probe” that executives of the IDA met with Finance Minister Goodale on the morning of November 23rd prior to the Goodale tax announcement later that evening. The existence of the IDA meeting and its subject were confirmed by both Honourable Minister Goodale’s office and by Ross Sherwood, Chairman of the IDA as noted in the following quotes from the CanWest News Service article:



“John Embury, Goodale's director of communications, said the members of the self-regulatory organization for the securities industry raised the issue of income trusts at the end of previously scheduled regular meeting.”

``There was a very vague, very general discussion,'' Embury said, adding that it dealt with the association's planned submission on the income trusts issue. ``They left the meeting no wiser than when they came through the door.”



“Ross Sherwood, chairman of the investment dealers association and CEO of Odlum Brown Ltd., said the discussion on income trusts focused exclusively on the association's submission on the issue which wasn't finalized at the time and was only released a week later. The announcement on income trusts early that evening ``came as quite a shock ... we had no idea.”



The IDA, as a self-regulator of the investment banking industry, should publicly disclose who attended the IDA meeting with Finance Minister Goodale on the morning of November 23rd. Since a subset of IDA Member investment banks were active in the unusually high volume and price up ticking in income trusts and dividend paying common shares that began at about noon that day, it is reasonable to anticipate that the RCMP will be reviewing communications and conducting interviews surrounding this IDA meeting with Honourable Minister Goodale.



Barry Critchley, of the National Post, wrote the following in his column on December 9, 2005 entitled “Vague heads-up on Ottawa's plans easy to decipher”:



“For instance, when asked yesterday, "When did you know that an announcement was coming?" an investment banking source said, "About 2:30 p.m." He was then asked how he found out. His reply: "Reliable sources."

That comment confirms the following comment from the chief executive of an income trust. "Our bankers told us the day before that something was happening. They didn't know what it was but they knew that something was underway."



On the IDA website, it says: “The enforcement process is an essential element in assuring investors that the IDA’s Member firms are effectively regulated and that each adheres to the highest standards of conduct.” The IDA Guide for the Subjects of an Investigation indicates that the IDA has jurisdiction for undertaking investigations into the conduct of its Members and their employees, which in this case would cover the IDA executives who attended the November 23rd morning meeting with Finance Minister Goodale and the traders working for the IDA Members who executed the unusually high volume and price up ticking in the income trust and dividend paying common share trades later that day.



1. Investigatory Powers of the Association

Pursuant to By-law 19, Enforcement staff of the IDA may undertake investigations into the conduct, business or affairs of its Members and their employees. Investigations may be undertaken on the basis of:

· a complaint received from a member of the public;

· a directive from the IDA’s Board of Directors;

· a request from a securities commission; or

· any information obtained or received by the IDA.



I would like to officially request that the IDA have no role as an investigator in the investigation by the RCMP IMET Unit into the alleged illegal insider trading of income trusts and dividend paying common shares due to the existence of the IDA executives’ meeting with Finance Minister Goodale in the morning of November 23rd and due to the possible subset of IDA Members who executed the unusually high volume and price up ticking in the income trust and dividend paying common share trades later that day.



My request for IDA enforcement personnel to recuse themselves from the RCMP IMET investigation on the alleged illegal insider trading of income trusts and dividend paying common shares is a request for them to break from their normal role as IDA investigators with official status in the RCMP Integrated Market Enforcement Team. The IDA’s normal role in RCMP IMET investigations is well defined in the RCMP IMET press release of January 2, 2005 on the laying of charges against an HSBC Securities (Canada) Inc. employee for theft of securities:



“’This is a good example of the seamless cooperation between securities regulators and IMET in investigations of capital markets fraud," commented Tom Atkinson, president of Market Regulation Services Inc. (RS). "RS, in conjunction with the Investment Dealers Association of Canada (IDA), fully assisted IMET in its work to bring this investigation to a successful close."



The objective of the IMET is to maintain investor confidence in Canada's capital markets by deterring market fraud and theft through enhanced enforcement and prosecution of serious market fraud and theft offences in Canada. The investigative work of the IMET complements the work of the financial markets' regulatory organizations such as the provincial securities commissions, Investment Dealers Association of Canada and Market Regulation Services Inc.



The Greater Toronto Area IMET brings together specialized investigative skills from the RCMP and participating agencies. It is currently supported by the Ontario Securities Commission, Investment Dealers Association of Canada, Market Regulation Services Inc. and the Mutual Fund Dealers Association of Canada.”



As we know, the IDA has recently realized that they simply cannot continue in the conflicting roles of representing themselves to be a self regulatory group, while also being registered in Ottawa as an industry lobby group for investment dealers. As a result, they are now in the process of splitting apart these conflicted roles as both a self-regulatory and lobby organization.



I appreciate your attention to the need for the IDA to recuse itself as an investigator assisting the RCMP IMET investigation on the alleged illegal insider trading of income trusts and dividend common shares, where IDA executives and IDA Member employees will be amongst the investigated. Those being investigated must provide their full co-operation to the RCMP IMET Unit, which must act independently on this matter.



Yours sincerely,





Larry Elford


Probe role of RCMP in last vote
February 16, 2008
James Travers


Ottawa

Canada is too cold, rich and stable to be easily mistaken for a banana republic. But from time to time – and this is one of them – this capital's willingness to turn a blind eye to bad behaviour explains any confusion.

Sometime too soon this country will plunge into the next federal election without knowing if the RCMP tilted the outcome of the last. That's as inexplicable as it is unacceptable.

Hale and hearty democracies don't stand around twiddling their collective thumbs when there's reason to fear that the police or, for that matter, the military are meddling in the political process. Still, that's precisely what's happening in the run-up to a campaign that may come as early as spring and certainly no later than fall 2009.

Canadians still don't have a clue what happened in the heat of the last campaign. They don't know why the RCMP, playing fast and loose with procedures, detoured so far out of its way to make sure voters knew Liberal finance minister Ralph Goodale was being investigated for rumoured leaks of his income trust decision.

As it turns out, the probe was a teapot tempest. A single finance department official was charged with breach of trust after an exhaustive 14-month investigation.

It's a pity, even a national shame, that equal time and energy haven't been applied to explaining the RCMP's curious actions. More than two years later, the motivation for the pivotal December 2005 intervention remains a mystery.

What is known, or at least what informs conventional wisdom here, is that it was the election's tipping point. Before the RCMP repeatedly flashed its investigation to the NDP, Liberals held a lead and Paul Martin was on course for a second minority mandate. But that changed when now defrocked commissioner Giuliano Zaccardelli dumped customary discretion by reporting to MP Judy Wasylycia-Leis that the RCMP was on the case. Surprise, surprise, she rushed to the microphone about as quickly as voters reached the conclusion that Liberals and their ethics were beyond the pale.

It's appalling but hardly shocking that the worst can reasonably be thought of the storied horsemen. The force's dabbling in politics dates back at least as far as its `70s barn burning and burglary. Worse, as the McDonald Royal Commission found and Canadians are periodically reminded, top Mounties have a nasty habit of hiding law-breaking from the force's elected masters and from those it vows to serve. This week alone, a Commons committee recommended that deputy commissioner Barbara George be found in contempt for her suspect pension-scandal testimony, and the federal privacy commissioner revealed the force is wrongly and secretly hoarding thousands of personal files.

Election conspiracy theories are thriving in that fertile ground. Two are most frequently heard. One is that the RCMP preferred the Conservative law-and-order platform, did what it could to help and was quickly rewarded with a budget boost. The other is that the force, drawn into Liberal internal bickering, paid back old Jean Chrétien debts by speeding Martin's defeat.

Whatever the truth, it's remarkable that Bill Elliott, labouring under the twin burdens of being the first civilian commissioner and old Tory ties, has yet to clear the air. Instead, it's heavy with the spoiled odours of banana republics.

Before the next election, Canadians have a right to know if the RCMP was more than a spectator in the last. Nothing less will do.

James Travers' national affairs column appears Tuesday, Thursday and Saturday.
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Postby admin » Thu Jan 24, 2008 6:06 pm

Further to Diane's comments on the previous post


"looking at the figure for financial fraud in Canada............experts agree that it is some number north of $20 billion per year....(my estimate is between $30 bil to $60 bil each year........compare that to the value of blue collar crime (look up property crimes under justice canada for example) which averages $5000 per crime, depending on which numbers you select.........places one in a position to say with a degree of accuracy that the amount of white collar crime in canada is approximately equal to all of the property crime in Canada.

To put into clearer perspective. IF Conrad Black's fraud was $60 mil (he was only caught on $6 mil) and IF the average blue collar property crime is $5000 per victim, then a guy like Conrad Black may be guilty of doing as much damage as 12,000 burglers, muggers and thieves..............................
Does this justify him going to jail for a few years?? In comfort??


second thought

I just found the document I was looking for

it is from govt of canada, victims of crime awareness week on the site
www.victimsweek.gc.ca

it shows crimes of property at $40 bil, the highest of the various categories

with a rate of 248 property related victimizations per 1000 population, this works out to be around 8 million property related crimes in canada each year

if that is true, then white collar crime and victimization financially by professionals is (in my opinion) equivalent to all the property related crimes in canada each year.........about 8 million crimes total

vandalism
theft
break and enter
motor vehicle theft
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Postby admin » Thu Jan 24, 2008 6:00 pm

The Canadian Center for Justice Study of Seniors as Victims of Crime - 2004 and 2005 compared to the December 2007 Justice Canada EKOS Survey on Seniors Concerned About Fraud suggests that there is about ten times higher victimization of seniors by fraud than by physically violent crimes. This would explain the much higher concerns being expressed by seniors about fraud than about physically violent crimes. Again, the higher % of seniors' fraud victims and higher % of seniors' concern about fraud, does not include the undetected skimming of seniors' and others' investment accounts from massive frauds, like income trusts sold at inflated prices on the basis of deceptive cash yields; toxic derivatives in asset backed commercial paper sold with "no use" bank guarantees; market timing of mutual funds by investment professionals; and, unnecessary transactions in foreign exchange and mutual funds for fee generation only.

"According to the 2004 General Social Survey (GSS), seniors were three times less likely than non seniors to experience a victimization [of crime] in the 12 months preceding the survey (10% versus 31%).
When looking at the risk of violent crime, it was found that seniors were much less likely than their younger counterparts to experience an assault, a sexual assault or a robbery. In 2004, there were approximately 12 self-reported violent incidents for every 1,000 seniors (aged 65 years and over). This rate was almost four times lower than the violent victimization rate recorded for those aged 55 to 64 (45 per 1,000), and almost twenty times lower than the youngest group aged 15 to 24 (226 per 1,000). These findings are consistent with results from the 1999 GSS."

Victimization of crime, in this Canadian Center for Justice Study on Seniors as Victims of Crime, refers to the following offence types. Financial fraud is not in the list of crimes covered in this Canadian Center for Justice Study.

Homicide/attempts

Sexual violations (levels 1,2,3)

Major assault (levels 2 and 3)

Common assault (level 1)

Robbery

Criminal harassment

Uttering threats

Other violent violations


This Canadian Center for Justice Study of Seniors as Victims of Crime - 2004 and 2005 points out another benefit from the proposed securities criminal intake complaints system jointly administered by the RCMP, regional and municipal police forces. Police collect rigorous statistics on the amount and type of violent physical crimes and property theft taking place, whereas the investment industry SRO's and the provincial securities commissions refer very few of the complaints they receive for criminal investigation and prosecution, despite evidence of fraud.

Diane Urquhart
Independent Analyst
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Postby admin » Thu Jan 10, 2008 3:34 pm

In my opinion, the RCMP is investigating the deceptive cash yields in the marketing materials of income trusts. However, we have become informed about the serious state in which the RCMP is presently operating, under the control of the investment industry Self-Regulatory Organizations and their facilitating provincial securities commissions. The RCMP IMET is completely without accountability to the investing public through proper civilian oversight. The civilian Management Board proposed by David Brown, former OSC Chairman, is not a civilian oversight agency like the police boards governing all other police forces in Canada. David Brown's civilian Management Board seeks to supervise RCMP police operations and this would serve to further consolidate the investment industry's control over white collar securities crime policing operations in Canada. A civilian Management Board dilutes government funding for other effective initiatives to ensure the thoroughness and integrity of white collar securities crime complaints intake and investigations in Canada. We do need a proper civilian oversight agency, or a new federal police commission as proposed by the House of Commons Public Accounts Committee, but this is an independent body not involved in daily policing but in the establishment of budgets and budget priorities, general standards of policing conduct and assurance of anti-corruption.
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Postby admin » Fri Dec 14, 2007 5:33 pm

The Highest Priority Solution to Fix Canada's Third World Securities Crime Enforcement
We have to do a complete overhaul of Canada's complaint intake process for white collar
securities crime since the current approach is failing and is designed to fail.
(1) The OSC, RCMP, regional and municipal police forces cannot continue to send all
persons with complaints of wrongdoing in the investment industry to the investment
industry Self-Regulatory Organizations - the Investment Dealers Association and the
Mutual Fund Dealers Association. These SRO's have no legislative authority, nor public
accountability mechanisms, to ensure that wrongdoers are properly investigated and
prosecuted.
(a) the SRO's lack any of the legislative tools necessary to properly investigate and
enforce fines on wrongdoers;
(b) the SRO's have no authority to lay criminal or quasi-criminal charges involving jail
sentence penalties, either directly or by presenting such charges to a court;
( c) the SRO's are private sector organizations that are not required to refer cases with
evidence of criminal offences to the RCMP or any other regional and municipal police
force;
(d) the SRO's interest to protect the reputation of the investment industry usually trumps
investor interests and the public interest, particularly when they have no legislative basis
to conduct their delegated investor protection functions effectively.
(2) The RCMP, regional and municipal police forces cannot continue to send all persons
with complaints of wrongdoing in the investment industry and in public corporations to
the provincial securities commissions.
(a) the provincial securities commissions have legislative tools to investigate and enforce
fines and other remedies, but it cannot conduct proper justice when their investigations
and adjudication functions are both done under one roof and under one chairman, who
makes all the decisions on who is investigated and prosecuted and who supervises the
commissioners that adjudicate all securities law violations;
(b) the provincial securities commissions have authority to lay quasi-criminal charges
involving jail sentences, by presenting such charges to a court; however, the provincial
securities commissions have no authority to prosecute criminal charges under the Federal
Criminal Code;
(c) the provincial securities commissions are crown regulatory agencies, but they are not
required to refer cases with evidence of criminal conduct to the RCMP or any other
regional and municipal police force;
( d) the provincial securities commissions are crown regulatory agencies, but their record
shows bias to protect the reputation of the investment industry and Canada's corporate
and professional elite rather than to protect investors, due to: their investment industry
funding sources; senior executives and commissioners being drawn from the investment
banking, accounting and corporate legal communities; and the lack of public
accountability mechanisms, such as hearings before standing committees of the
provincial legislatures or regular independent audits on the thoroughness and integrity of
enforcement activities.
(3) The RCMP Integrated Market Enforcement Team (IMET) and the regional and
municipal police forces throughout Canada must establish a new co-coordinated
securities criminal complaint intake process. In doing so, the RCMP (IMET) would
eliminate its sole reliance on the investment industry SRO's and the provincial securities
commissions for the receipt and preliminary assessment of complaints from the public
and insider whistleblowers about securities crimes.
(a) A new multi-jurisdiction police co-ordination committee should be established to set
the protocols for assignment of securities criminal investigations to the most logical
police force to do the job.
(b) The public should be able to make a securities criminal complaint at their local police
station, with the knowledge that their complaint will be properly attended to under the
protocols established by the new multi-jurisdiction police co-ordination committee.
(c ) The participating RCMP, regional and municipal police white collar crime units will
need higher budgets, more skilled resources and the new legislative tools sought to
become effective in white collar crime policing. The provinces should be reallocating
budgets away from the securities commissions into the regional and municipal police
white collar crime units. These units will play a larger and essential role in receiving
securities criminal complaints from the public and in criminal investigations that are best
completed at the regional level.
(d) The RCMP IMET, regional and municipal police force white collar crime units,
would conduct investigations assigned to them according to the established assignment
protocols accepted by all the participating police forces and administered by the new
multi-jurisdiction police co-ordination committee.
Prepared by Diane A. Urquhart
Independent Analyst
Mississauga, Ontario
Telephone : (905) 822-7618
Cell: (416) 505-4832
Backgrounder
The OSC fully delegates to the Investment Dealers Association (IDA) and the Mutual
Funds Dealers Association (MFDA) the review of the conduct of the registered
investment dealers and mutual fund dealers and all of their employees.
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Postby admin » Sat Dec 08, 2007 11:58 am

Why white-collar crime team fizzled
Launched four years ago to clean up
markets, police squad is now best known
for its failures
December 02, 2007
MADHAVI ACHARYA-TOM YEW
BUSINESS REPORTER TORONTO STAR
It was designed for show, an in-your-face
warning in the heart of Canada's financial
centre.
Two dozen police, followed by a swarm of
reporters and television crews, swept into
the Bank of Nova Scotia at King and Bay
armed with a search warrant. The bank
itself was not under suspicion. It had been
caught up in a probe surrounding another
company, Royal Group Technologies Ltd.
It was the first operation of IMET – the Integrated Market Enforcement
Team – set up 14 months earlier to tackle white collar crime in
Canada. The idea was to make headlines.
"They're sending a message to investors ... `We're going to clean up
the markets and you can depend on us,'" Richard Powers, professor at
the University of Toronto's Rotman School of Management, said at the
time.
Yet after four years of operation, only five charges have been laid –
one in Vancouver and four in Toronto. In the Vancouver case, broker
Kevin Steele was jailed six years for bilking investors out of $10.3
million.
The four Toronto cases – accounting fraud, stock market manipulation,
theft and fraud over $5,000 – are still working their way through the
courts. IMET's investigation into Royal Group is continuing. To date, no
charges have been filed.
Today when the enforcement team makes the news, it's usually
because of its dismal track record. Instead of reaping glory, the
vaunted police squad is becoming a public whipping boy in the debate
about Canada's perceived tendency to let white-collar crime go
COLIN MCCONNELL/TORONTO STAR FILE PHOTO
The media were out in force when IMET raided downtown offices in February,
2005.
THE SERIES
YESTERDAY: How
regulators have failed
to crack down on
stock market
miscreants while
developing an
international
reputation for inaction
and ineffectiveness.
TODAY: How a bigbudget
police squad
set up to take on
corporate crime
degenerated into a
bureaucratic mess
with few results.
TOMORROW: An
interview with the
head of securities
TheStar.com - Business - Why white-collar crime team fizzled Page 1 of 4
http://www.thestar.com/printArticle/281772 12/2/2007
unpunished.
Even the man in charge admits to shortcomings.
"There's a lot of stakeholders unhappy and I think justifiably so," said
John Sliter, the head of IMET in Ottawa.
But he's quick to deflect blame: "Yes, justice is taking a long time, but
I don't want to put the full responsibility for that on [IMET's]
shoulders. In that sense, it's the Canadian system."
Interviews with former officers and other observers show IMET started with much hope, but soon
felt the burden of a weighty RCMP bureaucracy and territorial bickering.
Former team leaders in Toronto and Vancouver talk of their frustration and "disappointment
across all boundaries." Investigators complain of legal roadblocks in increasingly complicated
cases, leading to delays in investigations and charges being laid.
The federal government commissioned a report last May to look into IMET's failings. It's
recommendations are expected to be released this week.
The Integrated Market Enforcement Team was formed in 2003, when stock markets and
regulators around the world were still smarting from the effects of U.S. scandals like Enron and
WorldCom.
Canada's own high-profile debacles – Bre-X Minerals Ltd. and YBM Magnex Ltd.– were still fresh,
and the federal government wanted to set investors' minds at ease. For the first time, an elite
team of regulators, police and legal experts was being brought together to investigate and
prosecute big stock market crimes.
"Helping protect Canadian capital markets, that's what this announcement is all about," Canada's
solicitor-general, Wayne Eaton, told reporters at the time.
Ottawa dedicated $120 million over five years to set up nine units across Canada, in Vancouver,
Calgary, Toronto and Montreal.
The Toronto units were to be led by Detective Inspector Craig Hannaford. A veteran white-collar
crime officer, Hannaford headed up the RCMP's probe of Livent, the Toronto theatre company that
imploded under charges that Garth Drabinsky and other former principals had falsified corporate
statements. A trial is expected to begin in the spring.
Setting up the teams took upwards of a year, a complex process that involved getting secure
sites and staff. Territorial issues emerged early on.
Prosecutors from the federal department of justice were deemed essential to help guide the
complex investigations.
According to an internal planning document, obtained by Canadian Press in March, 2006, federal
lawyers were needed to give "advice and assistance regarding aspects such as wiretap
applications, search warrants and disclosure advice to the IMETS during the course of
investigations."
The justice department had been given $17 million to make the lawyers available, but it initially
failed to do so.
"We are at a point in our implementation where we are in dire need of legal advisers to work
watchdog, Ontario
Securities Commission
chairman David
Wilson.
COMING UP: What’s
needed to fix the
mess.
TheStar.com - Business - Why white-collar crime team fizzled Page 2 of 4
http://www.thestar.com/printArticle/281772 12/2/2007
alongside of our investigators. They were to form an integral part of our integrated teams," Sliter
wrote to the department almost a year after the launch. Delays, as well as the lingering feeling
that neither provincial nor federal prosecutors were willing to step up, hurt morale, said Bill
Majcher, former head of IMET's Vancouver team.
"For the better part of the time I was there, we didn't have either the provincial or federal Crown
(prosecutor) willing to take responsibility for dealing with us. We were already running, and then
things start falling apart ..." Today, lawyers from the department are assigned to IMET teams in
Toronto, Vancouver, Calgary and Montreal.
Despite the program's well-funded start, it could be difficult to get beyond established RCMP
procedures when it came to hiring and pay, former insiders say.
In Toronto, Hannaford wanted a stock market expert on the team, a career Bay Streeter who
knew the big players, the market mechanics, and what was ordinary trading activity and what
was not – credentials, he knew, would command a six-figure salary. The government's standard
checklist for qualifications, however, put the pay scale in the middle five digits.
"We just couldn't get the classification process in the government to recognize that this person
had to be paid fairly well," Hannaford said.
Another frustration was the RCMP's habit of pulling officers off projects when it was short-staffed
in other areas. Need more security for visiting world leaders? Get an officer from IMET. A big drug
or immigration case needs more manpower? IMET.
IMET officers also complain that the Canadian legal system is too easily bogged down by
procedural sideshows such as stringent disclosure requirements – the prosecutor's legal
responsibility to give the defence access to all evidence it has gathered during an investigation.
In a complicated stock market fraud or investment scam, disclosure can amount to hundreds of
thousands of documents that have to be gathered, sorted, organized, and copied so they can be
given over to the defendant and his lawyers as soon as charges are laid in a case.
By some estimates, 30 per cent of the cost of an investigation goes to cataloguing, tracking, and
duplicating information to make sure copies will be available for the defence.
Even so, prosecutors may only rely on 100 documents or so to present their case; the defence,
about the same when putting alternate theories forward. "The rest is just sort of filler," says
Majcher, "but if somehow one box of nothing didn't get stored properly, in many cases that's the
basis for having a case tossed."
Another hurdle, they say, is the issue of compelling witnesses to speak to investigators.
In the U.S., prosecutors can issue subpoenas, forcing witnesses to provide testimony before a
grand jury once charges are laid.
Under Canadian law, members of the public are under no obligation to speak to law enforcement
officers. When trying to piece together a securities fraud case, the accountants, consultants, and
other office staff who may have information invariably consult their lawyers, then tell
investigators they don't want to give a statement.
If officers can convince a witness to talk to them, it's strictly voluntary. "It's basically, we're
totally open to their schedule and their lawyer's schedule," Hannaford said.
To add insult to injury, under the Mutual Legal Assistance Treaty, authorities from other countries
who come to Canada to conduct investigations can legally compel witnesses to provide
TheStar.com - Business - Why white-collar crime team fizzled Page 3 of 4
http://www.thestar.com/printArticle/281772 12/2/2007
statements. "So you have a funny situation where foreign law enforcement have more power to
collect evidence from witnesses in Canada than our own domestic police," Hannaford said.
All this leads to investigations dragging on, and on. Add historically light sentences into the mix,
and it's a recipe for plummeting morale.
In the meantime, white collar crime in Canada festers – along with a growing reputation for being
soft on stock market and financial crime. Majcher saw the devastating effect Canada's disclosure
law can have on international investigations first-hand in 2002 when he went undercover as part
of a joint RCMP-FBI sting that nabbed two corrupt Canadian lawyers.
The sting included Jack Purdy, a Canadian stock promoter who was charged, but later acquitted
of money laundering.
Even though the charges were filed in Florida, Purdy's lawyer was able to convince a judge that
the RCMP should be forced to turn over all its documents in the case, including those that actually
came from the FBI.
"The defence lawyer says he's a Canadian citizen and protected by the Charter,'" Majcher
recalled. " `He's entitled to everything in that (RCMP) file, including FBI intelligence reports, their
operational plans, and other notes.'"
The judge agreed, and the FBI officers involved were completely furious, threatening to cut
Canadian law enforcement out of subsequent investigations.
Majcher says that now he's on the investment side, he's a managing director with Hong Kongbased
investment bank Baron Group, he sees the impact on Canada's reputation in a new light.
"I remember meeting a fellow in New York. He said, `Bill, what's your area code. I said 604. He
said, `Oh, that's one of the area codes that I don't answer.'"
TheStar.com - Business - Why white-collar crime team fizzled Page 4 of 4
http://www.thestar.com/printArticle/281772 12/2/2007
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Postby admin » Fri Dec 07, 2007 2:19 pm

John Sliter, Superintendent
Director, IMET, RCMP

John: Thank you for your letter dated 28nov07 written in response to my letter to Commissioner Elliott dated 29aug07. I spoke to Sgt. Richard Bergman, as per your suggestion.

I am extremely concerned that you have recommended to me that I contact one of the industry created and controlled associations to discuss matters that are within the purvue of a government agency. The fact that you have referred me to this private sector association, with respect, is a significant part of the problem.

As I mentioned to Sgt Bergman, the RCMP and local police forces do not partner with the mafia to gain a better appreciation of the criminal world; instead, each police force has developed its own in-house expertise.

The same is required with respect to the financial services industry. The RCMP and local police forces need their own internal expertise; the fact that this key requirement has been contracted out to industry partners is a major flaw and one of the main reasons, in my opinion, as to why IMET has and will continue to fail Canadians. I believe most of the scams and abuses in the financial sector could be prevented if the leadership in the industry took the matter seriously and if the industry regulator actually took regulation seriously instead of merely focussing its efforts on protecting its members.

Sgt Bergman made reference to the complexity of the financial services industry and the benefit of working with the industry because, for example, you have access to the COMSET database. On the latter point, I would ask that you conduct an immediate investigation of the flawed COMSET database. I can refer you to at least two experts who would expose the systemic flaws of COMSET. I also can brief you personally on the ability of an IDA member firm to use or abuse this supposed reporting system. I briefly discussed this aspect with your colleage Dean Buzza.

I experienced first hand the total lack of integrity of the IDA and I would refer you to the question I raised at the recent Investor Forum which was covered in a recent article in the Toronto Star which is available on the following link:

http://investorvoice.ca/PI/3294.htm

While everyone outside of the industry was shocked when they heard my story, everyone I know in the industry was not at all suprised at all that the IDA simply reported my whistleblowing call back to my employer. No one from the IDA ever contacted me about my call. I personally met with the VP Enforcement of the IDA in January 2007 to discuss this matter and to suggest that many such infractions could be prevented if employees could trust the regulator to regulate. Nothing has been done since that meeting. I just recently met with the new CEO of the IDA, Susan Wolburgh-Jenah and, to-date, the IDA has done nothing to implement such an abuse reporting system. Is the industry controlled regulator really interested in having the abuses of its member firms reported to it? I think not. From time to time it would seem that a public flogging is well communicated in the media to appease the critics. But a regulator regulating with integrity???

I would like to meet with you the next time you are in Toronto either at your IMET Toronto office or at your Newmarket RCMP office. I spent twenty years in the federal public service where leadership and integrity mattered. It is time it mattered in the finacial services industry. Canadians cannot afford for the mess not to be cleaned up.

You need to develop and implement a new strategy. Your strategic IMET partners have, and will continue to let you down. By letting you down, all Canadians are being let down. That is why I stated that if it is status quo that is to be maintained, then Canadians would be better protected if we disband the entire fractious Canadian system and subcontract the work to Elliott Spitzer and the US Securities Exchange Commission.

I look forward to our meeting.

Jim
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Postby admin » Tue Dec 04, 2007 10:29 am

IMET 's are part of a seriously dysfunctional regulatory chain.

Ken K

Fraud squad lacking credibility

DICK LOEK/TORONTO STAR
Nick Le Pan, appointed by Ottawa to probe the RCMP’s Integrated Market Enforcement Teams, says the units are bogged down by bureaucracy.
RCMP teams fighting white-collar crime stymied by
poor leadership and complicated cases: Report

December 04, 2007
Madhavi Acharya-Tom Yew
Business Reporter

The RCMP must make fighting stock market fraud a priority and overhaul the way it investigates these complex cases if it hopes to improve its track record on catching white-collar criminals, according to a report released yesterday.

The much-anticipated report comes from Nick Le Pan, a special adviser appointed by the federal government to get to the bottom of the troubles at the force's Integrated Market Enforcement Teams. The teams, created in Vancouver, Calgary, Montreal and Toronto in 2003, were meant to crack down on high-profile stock market frauds and accounting scandals.

But, as Le Pan noted, the elite teams became bogged down by bureaucracy, staff turnover, lack of leadership and low morale.

"Legitimate criticisms centre on the lack of results and questioning whether the program and its partners have the sense of urgency needed to succeed. Nor has IMET demonstrated the leadership, tone from the top, results focus, nimbleness or consistent cohesion of action or communication among the players that is necessary to succeed," Le Pan wrote.

"Those being investigated or charged will understandably bring substantial high-quality resources to bear to defend themselves. The program is `playing in the big leagues' and needs to act that way."

Many observers have criticized Canadian enforcement as weak, especially when compared to jail sentences handed to those convicted of white-collar crimes in the U.S.


"While expectations of U.S.-style results are unrealistic, given Canada's legal and enforcement environment, the (enforcement teams) should be producing more results, more quickly," Le Pan wrote. "Without enhanced credibility, the existence of the program in its current form in the RCMP will be questioned more than it is today."

In Edmonton yesterday, Federal Finance Minister Jim Flaherty told reporters that he plans to raise the issue when provincial finance ministers meet next week in Ottawa, and adds the report reinforces the need for Canada to have a unified national securities regulator.

In Ottawa, Liberal finance critic John McCallum said stepped-up oversight of securities markets in Canada is a must. "I certainly agree that we should beef up our capacity to fight white-collar crime because I think that's an area where Canada is embarrassingly weak."

Several times in his report, Le Pan addressed the notion that white-collar crimes are not as serious as others. "How can we say that an elderly or unsuspecting person, who is criminally swindled out of their life savings, and lives in penury with lasting, disastrous consequences on their health or lifestyle, is less important than other victims of crime?"

Since 2003, enforcement teams have started 13 large-scale investigations, but have laid only one charge to date. On average, it takes teams 2.8 years to investigate a case. Four cases have been passed on to prosecutors, who are considering laying charges.

Le Pan also wrote that team investigations need to be more focused. "It is better to focus on charging a few key perpetrators with a few offences, reasonably quickly, than going after everyone involved, and ending up with an unmanageable investigation that drags on and may never be finished."

All the officers who started off in charge of team units have left in the past four years, and in three locations the unit will soon be on its third officer in charge, Le Pan found.

He also called for the RCMP, prosecutors and the federal government to develop a simple, formal plan to manage its caseload, and to take on more smaller, less-complex cases.

Accepting more big investigations should not be a priority until the enforcement group has improved its practices, the report said.

Le Pan said that he plans to stay on as special adviser until next October to help implement the recommendations.




--------------------------------------------------------------------------------
With files from Les Whittington and The Canadian Press
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Postby admin » Mon Dec 03, 2007 3:50 pm

New approach needed to fight securities fraud: Le Pan


Members of the RCMP's Integrated Market Enforcement Team
walk outside their mobile command post in Toronto in this file
photo from Feb., 2005.
Canadian Press

December 3, 2007 at 2:28 PM EST

OTTAWA — Canada has to rethink its approach to investigating and prosecuting securities fraud or continue to be outwitted by the smartest and best equipped white collar criminals in the country, says a new report.

The long-awaited report by former financial institutions superintendent Nick Le Pan is critical of the way the RCMP has overseen the creation of the Integrated Market Enforcement Teams (IMET) four years ago at the cost of $30-million a year.

The teams were meant to improve the investigation and prosecution of major securities fraud after a series of scandals, beginning with the Bre-X gold swindle a decade ago that cost investors billions of dollars and shook Canada's financial markets.

But Mr. Le Pan, whose appointment was part of Finance Minister Jim Flaherty's spring budget announcement of additional funding for IMET, found the teams have yielded disappointing results and are unlikely to be more successful unless changes are made.

A new report Monday called for a wholesale makeover of the way the RCMP investigates major crimes in Canada's capital markets, saying the current system is inadequate to catch big white-collar criminals. (Reuters)

RCMP document: The Le Pan IMET report

“The program is ‘playing in the big leagues' and needs to act that way,” the report states.

“The IMET program is operating in a very challenging environment that it needs to be better equipped to succeed in ... Those being investigated or charged will understandably bring substantial high-quality resources to bear to defend themselves.”

Mr. Le Pan said the teams are under-staffed, poorly supervised and beset with a high vacancy rate and turnover of key staff.

Some of the problems are systemic, said Mr. Le Pan, but he blamed many on the way the RCMP has implemented the program and the low priority given to white collar crime by the national police force and the federal Public Prosecution Service of Canada.

“Legitimate criticisms centre on the lack of results and questioning whether the program and its partners have the sense of urgency needed to succeed,” the report says.

“Nor has IMET demonstrated the leadership, tone from the top, results focus, nimbleness or consistent cohesion of action or communication among the players.”

After the collapse of U.S. energy trader Enron Corp. about five years ago in one the biggest white collar crimes in U.S. history, U.S. enforcement officials have prosecuted, fined and jailed many senior executives for corporate wrongdoing. As well, new laws have required more rigorous corporate financial reporting, while the national stocks regulator, the U.S. Securities and Exchange Commission, has toughened its regulation and enforcement actions.

For example, the U.S. justice system led the prosecution of former Canadian media mogul Conrad Black, who was convicted of fraud and obstruction of justice and awaits sentencing next week in a Chicago court. Canadian regulators also investigated Lord Black but awaited the result of his U.S. trial before deciding what to do next.

Critics of the Canadian system note that it would be easier to police white collar crime in this country if the 10 provincial securities regulators were merged into one national body, with SEC-type powers and resources to crack down on insider trader and corporate fraud.

The Le Pan report, which was issued to the RCMP on Oct. 25 but made public Monday, makes a number of recommendations, including more resources, better leadership, having a more senior officials oversee investigations, and placing more importance both in investigating and prosecuting white collar criminals.

The report's release Monday was accompanied by a statement from RCMP Commissioner William Elliott, who says the police force has already started to implement the recommendations.

Mr. Le Pan cautions that even if all the changes are implemented, catching white collar crime in Canada will continue to be more difficult than in countries such as the U.S. and Britain.

One hurdle police and prosecutors face is that unlike many industrialized countries, Canada lacks a national securities regulator, an issue that Mr. Flaherty has urged provinces to address.

“The existence of multiple securities regulators in Canada can make achieving consensus on issues difficult and time consuming,” Mr. Le Pan writes. “Different provincial regulators have different interpretations of court decisions which has hampered setting up joint securities intelligence units with the RCMP in some provinces.”

Another is with Canada's legal system, which lacks the teeth to compel those not being investigated to turn over data and documents that would help the police, or does not allow charging people in stages due to full disclosure rules.

As well, Canada's legal system does not allow prosecutors to take charge of investigations, as is the case in the U.S.

Given these limitations, Mr. Le Pan says it is unrealistic to expect U.S.-style results on securities fraud in Canada.

“Under-promising and over-achieving should become the watchwords for IMET, not the other way around,” the report says.

Mr. Le Pan says initially, the IMETs should focus on smaller, less complex investigations to get some taste for success.

“Having success in smaller cases adds to credibility of the IMETs and to credibility of capital markets enforcement.”
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